TAMPA, Fla — As stimulus talks stall, more Americans are growing desperate for financial relief, and local experts say it's leading many to rely on payday loans to make ends meet.
These loans often have high interest rates and can trap borrowers in a cycle of deep debt.
"It took me way longer than I initially anticipated to pay it off,” said Pinellas County artist Eckwood Ellison.
Payday loans are best known for providing quick, short-term cash -- often get without a credit check. They usually need to be repaid within a few weeks, but the price tag is outrageous.
According to the Center for Responsible Lending, the average payday loan in Florida carries an interest rate of more than 300 percent and can go even higher.
"The money that you would normally have designated for rent or a car loan now has to go to this extra bill that never really gets paid off -- just cycles, every week,” Ellison said.
He knows this well. The Pinellas County artist has relied on these loans to make ends meet amid the pandemic when no other lenders would help.
"You can make it to your next pay period, but it doesn't really solve the problem. We need solutions at a time like this,” Ellison said.
However, with stalled stimulus talks in Washington, it's unclear if relief is coming anytime soon.
"It has become a trend as the federal and state's economic assistance has dwindled,” said attorney William Pena Wells with Gulfcoast Legal Services.
It’s a trend attorneys say is true for the Tampa Bay area, as well.
"People who would ordinarily be able to depend on that next paycheck that isn't there have to find some other alternative to make ends meet,” Pena Wells said.
Yet, before you sign for that cash, experts recommend seeking alternative options first.
"Talk to your creditors. Explain to them, work out payment plans, try to do something that won't put you in deeper debt,” Pena Wells said. “Try to borrow it from family or friends try to go to your credit union or a bank or other reputable financial institution.
"Anything that you can think of to do to avoid this quicksand of the payday loans…”
$500 is the most you can borrow in Florida on a payday loan, but with the high interest rates and the short payoff time, experts say that's enough to keep you in a cycle of debt.
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